Mercury Insurance in trouble for high rates

February 8, 2010 5:40:25 PM PST

There are major questions for a big auto insurance company over sky-high rates.

A 275 page California Insurance Commission report obtained by the San Francisco Chronicle is landing a damaging blow to Mercury Insurance, just as it fights to change California car insurance regulations.

The state found evidence that Mercury may have violated state laws by, according to the Chronicle, flagging consumers for higher rates if they had been in an accident, even if it was not their fault and collecting higher premiums than those allowed by law.

Mercury Insurance has spent millions of dollars on Prop 17 which would change the rules on car insurance.

Those opposed to Prop 17 say this shows what the company and the measure are really all about.

"Mercury Insurance company is one of those insurance companies that really wants to be able to discriminate against people it does not want to insure. It wants to figure out a way to avoid people it doesn't want to insure and only insure those that will pay them the most money," Harvey Rosenfield from Consumer Watch.

Late Monday afternoon, Mercury Insurance issued a response saying, "Consumer Watchdog's latest attempt to mislead consumers and voters and attack Mercury is to rehash old allegations... Many... were dropped... because they were found to be without merit."

The organization Yes on 17 says 80 percent of California drivers will benefit from its passage and voters will decide the issue on its merits.